Your Innovation Problem Is Really a Leadership Problem

When Karl Ronn recently said, “Companies that think they have an innovation problem don’t have an innovation problem. They have a leadership problem,” I listened carefully.

I featured Ronn, a former P&G executive (and current executive coach and entrepreneur), in several places in The Little Black Book of Innovation, most notably for his rant against the evils of focus groups. Ronn is thoughtful, widely read, a seasoned practitioner, and a great communicator.

Ronn’s basic idea was that four decades of academic research and two decades of conscious implementation of that work have provided robust, actionable answers to many pressing innovation questions. Practitioners have robust tools to discover opportunities to innovate, design, and execute experiments to address key strategic uncertainty; to create underlying systems to enable innovation in their organization; and to manage the tension between operating today’s business and creating tomorrow’s businesses. Large companies like IBM, Syngenta, Procter & Gamble, 3M, and Unilever show that innovation can be a repeatable discipline. Emerging upstarts like Google and Amazon.com show how innovation can be embedded into an organization’s culture from day one.

Yet, with all of this progress it still feels like a positive surprise when you see a large company confidently approach the challenges of innovation.

In Building a Growth Factory, my co-author David Duncan and I suggested at least one root cause: too many companies use point solutions to address a systematic challenge: Let’s run an idea challenge! Have an ideation session! Form a growth group! Open a corporate venturing arm! Create incentives for innovation!

None of these is bad, but point solutions don’t solve system-level problems. Duncan and I suggest working on four systems — a growth blueprint, production systems, governance and controls, and leadership, talent, and culture. It isn’t easy to do all of that, but it is what is required to really make innovation work at scale.

Ronn agrees, but notes that the responsibility for such systemic work ultimately rests with a company’s leadership team. And it’s absolutely necessary. Research by Clayton Christensen, Rita McGrath, Richard D’aveni, and Richard Foster make very clear that we are in a new era where competitive advantage is a transitory notion. (McGrath’s forthcoming book is provocatively titled The End of Competitive Advantage.) Any executive that doesn’t make innovation a strategic priority, ensure there is ample investment in it, and approach the problem strategically is committing corporate malfeasance.

Further, leaders can’t just set the context and hope that innovation happens. Innovation is enough of an unnatural act in most companies (which were built to scale yesterday’s business model, not discover tomorrow’s) that it requires the day-by-day attention of the company’s top leadership team or it simply won’t stick.

Critically, leaders have to figure out how to manage two distinct operating systems: one that minimizes mistakes and maximizes productivity in today’s business versus one that encourages experimentation and maximizes learning in tomorrow’s business. It isn’t either/or. It is both/and.

So what stops senior executives from rising to the innovation challenge? Leaders will typically highlight factors such as short-term pressures from investors, talent deficiencies, the challenge of implementing innovation-friendly rewards structures, the still fuzzy nature of innovation, and, in candid moments, their own discomfort with the different mental frames required to lead innovation.

It’s time for leadership to step up. Match innovation rhetoric with personal involvement and investment. Move beyond narrow solutions to more systemic approaches. Raise aspirations from being the most innovative company among a tightly defined peer group to approaching innovation like Amazon, Pixar, 3M, or IBM. Actions that feel like luxuries today will be imperatives tomorrow, so get started.